Oil supply in troubled waters!

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One of the biggest challenges facing all governments is energy. As energy exploration increasingly moves to difficult geographical terrain and is moved greater distances in larger volumes there are difficult challenges ahead. Do they have the technology? What is the real ‘cost’ of energy? How are supply chains managed? Are they sustainable? Do consumers care? And what are the environmental challenges?

New methods of exploration and extraction are necessary when oil is beneath ice. Increasingly large oil companies have faced these challenges daily in the Arctic. Technology is built on that developed for North Sea oil with drilling platforms on ice. The estimated cost of the BP ‘Deepwater Horizon’ disaster in 2010 in the Gulf of Mexico is $50 billion. When offshore oil wells blow out they can spue 50/60,000 barrels a day and it is all waste that needs cleaning up as governments with responsibility for the territory fight it out with the oil companies for compensation. Conditions in the Arctic are much more hostile than the Gulf of Mexico. When a spill occurs it is usually detected by satellite-mounted synthetic aperture radar (SAR). The technology is robust and works by bouncing radio waves from an orbiting satellite on the sea. In the Arctic SARs are less use because floating ice behaves just like an oil slick and it is unable to discriminate between them. The current technology is ineffective if there is more than 30 per cent ice cover. In this climate infrared or ultraviolet scanners are required because they can discriminate but they have to be carried and detected by ships or planes. Robot submarines known as Automated Underwater Vehicles (AUVs) are also pioneering detection.

As energy becomes more expensive the growing demand from global industry makes hostile environments more attractive propositions. Risk of disrupting supplies increases as distances become greater to transport energy from its original location to where it is consumed. These disruptions increasingly have included oil spills and the damage that causes to environments. Do consumers care about cost and which cost exactly do they care about? Usually the economic cost and seldom the social or environmental costs unless forced to do so through taxes. Taxation is a means to regulate industry but it is not easy. Boundaries and responsibilities are blurred. Enforcement is weak in neo liberal economies committed to free markets. Penalties are often watered down when it comes to oil. The politics of oil and energy is tricky.

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